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Philippines: Credit growth to accelerate – BSP
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) sees credit growth accelerating further, sustaining the uptick for four straight months as the economy continues to reopen.
BSP Governor Benjamin Diokno said bank lending appears to have bottomed out when it contracted for eight straight months between December 2020 and July 2021.
“We are slowly seeing signs of economic normalization as a result of our concerted efforts. Bank lending appears to have bottomed out, with loans by universal and commercial banks expanding by four percent in November from 3.5 percent in October,” Diokno said.
Preliminary data from the central bank showed loans disbursed by big banks reached P9.35 trillion in November last year, P358 billion higher than the P8.99 trillion recorded in the same month in 2020.
“The latest uptick marks the fourth straight month of growth after several months of contraction,” the BSP chief said.
Bank lending finally started recovering in August as the aggressive easing, including the 200-basis-point cuts in interest rates and lowering of reserve requirement ratio undertaken by the BSP in 2020, was finally absorbed by the economy.
“The effectiveness of our monetary interventions could also be seen in the sustained decline in domestic market interest rates. By October, the 91-day T-bill rate as of September 2021 fell by more than 200 basis points over the same period,” Diokno said.
In addition, he said the central bank suspended certain online banking charges and temporarily waived fees for applications for electronic payments and financial services and PhilPASS fund transfer transactions to provide continued access to financial services during this time.
Likewise, the regulator also imposed a cap on credit card charges to ease the financial burden on consumers.
Under Circular 1098, the BSP maintained the maximuminterest rate or finance charge on unpaid outstanding credit card balance at two percent per month or 24 percent per year.
Furthermore, he said the monthly add-on rates that credit card issuers could charge on installment loans was retained at a maximum rate of one percent.
“Beyond targeted monetary policy measures, the BSP implemented extraordinary liquidity measures to help the national government finance its COVID-19 response,” Diokno said.
The BSP has also been extending P540 billion in provisional advances to the national government to bankroll its COVID response measures. The amount has been lowered to P300 billion as government revenue collections continued to pick up.
The central bank’s pandemic-response measures injected P2.3 trillion in liquidity into the financial system, equivalent to nearly 13 percent of the size of the Philippine economy.
“But while we have deployed extraordinary measures in response to the unprecedented nature of this crisis, our policy toolkit and regulatory space are far from exhausted. We stand ready to support the country’s continued recovery using the tools at our disposal,” Diokno said.
Source: https://www.philstar.com/business/2022/01/17/2154308/credit-growth-accelerate-bsp